By June 2018, Pakistan will be asked to submit its report to FATF, the watchdog for money laundering to assist terrorism, failing which the country will be blacklisted. Going by the past experience of having been greylisted from 2012 to 2015; country may feel it can overcome the impending danger too. But that will simply be a complacent approach, which may cost dearly to Pakistan and the unsuspecting public.
But, why should blacklisting have to do with difficulties to common people and large-cap companies? Let’s explain it with some individual’s
or some proxy organization’s bank accounts, whose money is suspected to be used to fund militant organizations. Talking of live example, how Hafiz Saeed’s bank account going
to affect the common people of Pakistan if nation fails to blacklist his accounts? Which means the particular bank fails to monitor the various transactions including fund’s origin
and destination. This implies, stricter scrutiny by financial watchdogs of any overseas bank transactions leading to unwanted delays in settlement or outright rejection. So, almost all banking transactions including that of individuals or legitimate trading
companies may fall in the category of being dubious.
money transferred to your account either by your relative or part of some trading account or some sort of donation for your NGO, all such transactions will fall prey to vigorous investigations, resulting not only in those delays that you absolutely don’t
want but also cancellations. The latter will happen more often as your bank doesn’t do the documentation work it’s supposed to and when that happens and there’s no proven record of where the money is coming from, or where it’s going,
the transaction is dropped. So, none of his faults, a common person will be left high and dry.
Now, what about the trading
powerhouses involved in large investment in Pakistan? Obviously, they cannot be left in a lurch about their financial dealings, resulting in distrust in the nation and withdrawal from any future projects. This will hit the country’s economy in a
hardest manner. The problem, unlike in 2012-2015 when Pakistan was greylisted, will aggravate many folds as a result of current financial sanctions by IMF and USA. With this happening, so-called
‘improved investment climate’ that the government has been touting and selling wherever it can be sold, will go up in a puff. This would especially take a hit when international banks don’t consider it worth the hassle to put any significant
amount of business in Pakistan, resulting in further economic disconnect.
So, is Pakistan facing a banking isolation akin to political
isolation internationally? How much I may like to say no, but I fear that is the bitter truth and blacklisting by FATF in Jun 2018 may prove to be the final nail on Pakistan’s economic
Last year, the New York State Department of Financial Services (DFS), had fined Pakistan’s Habib Bank Limited
(HBL) $225 million for infringing laws designed to combat illicit money transfers that opened the door to the financing of terror and not surprisingly, that particular door opened to a Saudi bank which has for long been believed to be affiliated with
al-Qaeda. DFS for the first time had ordered a bank to shut down in the US because HBL had failed to correct serious weaknesses first identified more than a decade ago.
Going by the same logic, if Pakistan fails to bring transparency in their financial transactions and do not submit the required feedback to FATF, country
may face an extraordinary economic enigma jeopardizing the very sustenance in near future.
needs to act and act fast enough to identify Hafiz Saeed’s like accounts, connected with or suspected to be connected in money laundering and freeze them to ensure financial freedom
to the others.
15 Mar 18/Thursday.